The circular test is satisfied if an index allows comparison of period 2 with period 0 via period 1, i.e., P₀₁ × P₁₂ = P₀₂. Which index commonly fails this test?
Explanation:
Laspeyres index uses fixed base-period weights, so P₀₁ × P₁₂ ≠ P₀₂ in general due to weight rigidity, failing the circular test; Fisher's index satisfies it under certain conditions.
Assertion (A): In any probability distribution, P(A) + P(A') = 1. Reason (R): A and A' are mutually exclusive and exhaustive events. Choose the correct option:
A.Both A and R are true, and R is the correct explanation of A
B.A is false, R is true
C.Both A and R are true, but R is not the correct explanation of A
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